1. Non Technical Barriers in Developing Geothermal District Heating in the Paris Basin Pierre UNGEMACH and Miklos ANTICS GPC IP Paris Nord 2, 14, rue de la Perdrix, Lot 109, B.P. 50030 95946 ROISSY CDG CEDEX, FRANCE e-mail: pierre.ungemach@geoproduction.fr pierre.ungemach@geoproduction.fr m.antics@geoproduction.fr m.antics@geoproduction.frm.antics@geoproduction.fr

2. OUTLINE 1. MILESTONES 2. STATUS 3. TECHNICAL SHORTCOMINGS 4. NON TECHNICAL OBSTACLES 5. CONCLUSIONS

3. MILESTONES (1)  1960’s Pre-oil shock first attempt – abandoned first attempt – abandoned second attempt successful doublet completion second attempt successful doublet completion  1973-1978 Post first oil shock four completed doublets four completed doublets enforcement of legal framework enforcement of legal framework  1979-1986 Post second oil shock 51 completed doublets 51 completed doublets >90% success ratio >90% success ratio first well damage symptoms first well damage symptoms  late 1980’s Early exploitation stages thermochemical (corrosion/scaling) damage thermochemical (corrosion/scaling) damage equipment failure equipment failure

4. MILESTONES (2)  1990’s Technological/managerial maturation technological improvements (R&D stimuli) technological improvements (R&D stimuli) debt renegotiation debt renegotiation abandonment of 21 non economic/severely damaged doublets abandonment of 21 non economic/severely damaged doublets  2000’s Follow-up. Where to go next? Privatisation Privatisation Co-generation Co-generation Future prospects (development vs. sustainability issues) Future prospects (development vs. sustainability issues)

5. PARIS BASIN DISTRICT HEATING SCHEME

6. PARIS BASIN DISTRICT HEATING DOUBLET COMPLETION/ABANDONMENT STATUS -5 0 5 10 15 20 Year Abandonned doublets Completed doublets 758085 909500 05

7. PARIS BASIN GEOTHERMAL HEATING 191--Co-generation doublets 14776Self flowing wells 20273649Artificial lift wells 29,40036,20033,80036,000Unit Yield (GWht/yr) 5.96.76.06.5Unit Capacity (MWt) 1,0001,2401,4552,000Heat Production (GWht/yr) 200227260360Installed capacity (MWt) 34 4355Operating doublets 2006200019901985 AchievedTarget STATUS31/12/2006

8. TECHNICAL SHORTCOMINGS  Corrosion/scaling damage thermochemically sensitive geothermal brine causing well damage (corroded casing, reservoir plugging) and equipment failure thermochemically sensitive geothermal brine causing well damage (corroded casing, reservoir plugging) and equipment failure  Equipment failure Downhole production pumps Downhole production pumps Injection pumps Injection pumps Heat exchanger plugging Heat exchanger plugging Regulation malfunctioning Regulation malfunctioning  Consequences Productivity losses Productivity losses Frequent/prolonged doublet shutdown Frequent/prolonged doublet shutdown

9. NON TECHNICAL BARRIERS FINANCIAL  Massive debt charges Investment10 M€ Investment10 M€ OM costs0.6 M€ OM costs0.6 M€ Equity5-10 % Equity5-10 % Debt90-95 % Debt90-95 %  Low fossil fuel costs MWht natural gas < 30 € MWht natural gas < 30 €  Consequences Debt repayment charge >50-60% of revenues Debt repayment charge >50-60% of revenues Near to bankruptcy state Near to bankruptcy state

10. NON TECHNICAL BARRIERS SELECTED FINANCIAL FIGURES Item/doubletA1A2BCD1D2 (1)(1) (2)(1) (2) Total heat supply (MWht/yr)58,00043,50048,88851,00040,00031,000 - geothermal39,50032,50042,00041,00026,00015,000 - back-up boilers18,50011,0006,00010,00014,00016,000 - geothermal coverage %687587.5806548 Heat selling price (€/MWht)3837383941 Revenues (10 3 €/yr)213115981808200616461285 Expenditure (10 3 €/yr)206116071764188614921349 - debt charge1082103710521159656488 - power133108157908579 - back-up fuels508302165274384439 - maintenance247224281268276252 - heavy duty workover provision 5537615038 - overhead37 494453 Balance (10 3 €/yr)70-944120154-64

11. NON TECHNICAL BARRIERS OPERATOR’S EXPERTISE  Geothermal operators lacking Mining experience (well maintenance/workover, downhole production pumps, corrosive/scaling fluids handling) Mining experience (well maintenance/workover, downhole production pumps, corrosive/scaling fluids handling) Heating experience in operating GDH grids, under retrofitted schemes, combining several base load, backup/relief energy sources and fuels Heating experience in operating GDH grids, under retrofitted schemes, combining several base load, backup/relief energy sources and fuels Managerial/entrepreneurial skills Managerial/entrepreneurial skills No integrated management structure. Unclear definition of intervening parties duties and commitments. Inefficient marketing/negotiation of heat sales and users’ subscription contracts No integrated management structure. Unclear definition of intervening parties duties and commitments. Inefficient marketing/negotiation of heat sales and users’ subscription contracts

12. NON TECHNICAL BARRIERS FISCAL (1)  VAT 19.6 % applicable to GDH operators whereas gas and electricity producers benefit from a 5.5 % rate. This is clearly unfair.  IMPACT: Sector € (VAT free)€ (VAT included)  building heating, geothermal grid 445528  building heating, gas fired boilers 445518  individual gas heating 449506  individual electric heating 445520

13. NON TECHNICAL BARRIERS FISCAL (2)  Local, so called, professional tax penalises GDH grids serviced under lease/concession contracts (non deductible infrastructure neutral costs). Prejudice: GDH grid serving 5,000 equivalent dwellings #70,000 €/yr.  Ecotax exemption for individual users (families) arguing that ecologic taxation do not apply to them whereas they represent ca 25% of total energy consumption (heat+power)

14. NON TECHNICAL BARRIERS IMAGE  GDH difficult to apprehend & comprehend  GDH remains esoteric and somewhat exotic compared to other RE and fossil fuel sources  GDH regarded, in the early days, as a poorly reliable, costly and, occasionally, hazardous technology  More efforts required to attract a wider social acceptance and public awareness.

15. NON TECHNICAL BARRIERS CONCLUSIONS/RECOMMENDATIONS  Most NT obstacles, if not yet totally removed, are being progressively overcome  WHAT IS NEEDED MOST Operators side. More integration, less dissemination, by grouping several GDH grids into single management structures with a well defined mining/heating synergy Operators side. More integration, less dissemination, by grouping several GDH grids into single management structures with a well defined mining/heating synergy State side. A clearly stated (and applied) environmental policy explicitly by favouring RES via relevant regulation, fiscal incentives and ecologic taxation. State side. A clearly stated (and applied) environmental policy explicitly by favouring RES via relevant regulation, fiscal incentives and ecologic taxation. Overall. Gain wider social acceptance via selectively targeted actions. Overall. Gain wider social acceptance via selectively targeted actions.